Katherine and Louis Kealoha are convicted of conspiracy and obstruction

Former Honolulu Police Chief Louis Kealoha and former deputy city prosecutor Katherine Kealoha were found guilty of conspiracy and obstruction of justice by a jury in federal court on Thursday, June 27, 2019.

CINDY ELLEN RUSSELL / CRUSSELL@STARADVERTISER.COM

Katherine and Louis Kealoha walked toward Queen Street on Thursday after being found guilty in federal court of conspiracy and obstruction of justice.

Guilty.

Honolulu’s former Police Chief Louis Kealoha and his wife, former Deputy Prosecutor Katherine Kealoha, once trusted leaders of the city’s law enforcement system, were found guilty Thursday of using their positions and power to frame a family member and enrich themselves.

The case exposed a level of corruption that shook the faith of the community in island law enforcement and is leading some officials to call for further scrutiny of the Honolulu Police Department.

It took federal prosecutors to step in and convict the Kealohas.

“The audacity of this couple to use the power vested in them as law enforcement officials to fund a lavish lifestyle and satisfy their personal vendettas was unconscionable,” said Robert Brewer, U.S. attorney for the Southern District of California. “They were supposed to enforce the law — not break it.”

It’s nearly six years to the day since the Kealohas staged the theft of the mailbox at their Kahala home in a scheme designed to keep the cash flowing — including money from Katherine Kealoha’s now 99-year-old grandmother.

The trial, which began more than a month ago, included 70 witnesses, 16 days of testimony and three days of closing arguments. It took the judge more than an hour to explain the instructions to the jury before they began deliberating.

But it took the 12 jurors only one day to find the Kealohas — and two of their three fellow defendants — guilty on each of four felony counts in the federal conspiracy and corruption trial.

It was a stunning end to one of Hawaii’s most scandalous corruption and conspiracy trials.

After the guilty verdicts were announced, federal prosecutors then asked that Katherine Kealoha be taken into custody immediately. But U.S. District Chief Judge J. Michael Seabright said he will consider the issue at a hearing scheduled for this morning.

Katherine and Louis Kealoha face a maximum of 20 years in prison for the most serious charge, obstruction of justice, and up to five years for conspiracy. They could also each be fined $250,000, which is exactly the amount Louis Kealoha was paid in severance when he resigned as chief of police in February 2017. His severance agreement included the stipulation that he pay back the $250,000 if he was convicted of a felony.

Seabright told the newly convicted defendants that they remain out on bond until they are sentenced, but “the presumption of innocence no longer applies.”

Katherine Kealoha’s sentencing is scheduled for Oct. 7, followed by Louis Kealoha on Oct. 15, Hahn on Oct. 21 and Nguyen on Oct. 28.

Only retired HPD Maj. Gordon Shiraishi was acquitted — of conspiracy, attempting to obstruct an official proceeding and of making a false statement.

Had Shiraishi been convicted of the three counts against him, his fellow defendants also could have been convicted of the same counts as part of the conspiracy.

The Kealohas face a second trial on Oct. 21 on charges of bank fraud, aggravated identity theft and obstruction of justice in connection with the alleged theft of a $167,000 inheritance of two children for whom Katherine Kealoha served as financial guardian.

Kealoha also faces charges related to allegations that she and her brother, Rudolph Puana, trafficked in opioids and that Kealoha used her position as a deputy prosecutor to hide it.

After they were convicted Thursday, the Kealohas left the federal court building, and Louis Kealoha said, “There’s still a lot to take in. … I just want to thank everybody, especially the community for the love and support. That’s all I have to say.”

The five defendants were accused of conspiring to frame Gerard Puana, Katherine Kealoha’s estranged uncle, for the alleged theft of the Kealohas’ Kahala mailbox in 2013 and then lying to federal authorities to cover their scheme.

Prosecutors said the Kealohas were trying to smear Puana and Katherine Kealoha’s grandmother Florence Puana because they were catching on to the fact that the Kealohas had used the proceeds from a reverse mortgage on Florence Puana’s home to bankroll a lavish lifestyle.

The government said Katherine Kealoha used the money to pay for a Mercedes-Benz, a Maserati, a trip to Disneyland and other expenses including utility bills and a $23,976 breakfast at the Sheraton Waikiki to celebrate Louis Kealoha’s selection as chief.

Prosecutors said Katherine Kea­loha burned through $135,000 of Florence Puana’s money in six months.

Alexander Silvert, a deputy federal public defender who represented Gerard Puana, first brought the conspiracy case to the FBI’s attention.

Silvert spoke with Gerard Puana after the verdict and said, “He’s very emotional, really feels vindicated for the first time in a long time. He can barely speak.”

Florence Puana said before the trial that all she wants is for all the lying to end. Silvert said, “Florence is extremely ill and is not even yet aware of the verdict because she’s extremely sick.”

“I think this sends a strong message to law enforcement and the community that if you abuse your power to frame an innocent man, you’re going to be held accountable,” Silvert said. “On behalf of the Puanas, we are very grateful that someone has believed their story.”

The Puanas and their family issued a statement that thanked the U.S. Department of Justice, their attorneys and investigators, the entire Federal Public Defender’s Office, their family attorneys and the jury.

“We find no joy or comfort in the outcome of the ‘Mailbox Trial.’ Our family’s losses have been tremendous,” the statement read. “Florence’s home will never be restored to her. The years of humiliation, heartache, tears and sorrow inflicted on Florence, Gerard and our family won’t be assuaged or erased. Some family relationships have been completely, perhaps forever severed, while others still remain tenuous. Yet through it all, our ohana has survived strong and united. We will eventually recover as we continue to look after each other.”

The Kealohas were prosecuted by a team based out of San Diego that included Assistant U.S. Attorneys Michael Wheat, Joseph Orabona, Colin McDonald and Janaki Gandhi; former prosecutor Eric Beste; and FBI agents based in the Honolulu field office.

Brewer, the U.S. attorney, said, “The jury has spoken, and it has loudly said NO to corruption. NO to abuse of power. NO to special treatment. NO to injustice.”

During the reading of the verdict, most of the seven male and five female jurors avoided looking at the defendants.

As they filed out of the courthouse, some jurors appeared relieved and relaxed. Some smiled broadly. One man took a bow as he looked to the Honolulu Star-Advertiser camera.

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